June 20, 2018 / 4:49 AM / a month ago

Thai PTT to buy Engie's Glow in power deal that could be worth more than $4 bln

* PTT’s GPSC to pay $2.9 bln for Engie’s 69 pct Glow stake

* Deal targets bigger slice of Thai industrial power supply

* Tender offer for remaining Glow shares to follow

* GPSC lines up loans; considers major share, bond issues

* GPSC shares slide 6 pct on news and financing plans

By Chayut Setboonsarng

BANGKOK, June 20 (Reuters) - Thai energy giant PTT Pcl said it will buy domestic power firm Glow Energy Pcl , controlled by French giant Engie SA, in a deal that could be worth more than $4 billion as it seeks to play a bigger role in supplying power to the country’s industrial heartlands.

In a statement on Wednesday, PTT unit Global Power Synergy Pcl (GPSC) said it will first pay 97.56 billion baht ($2.98 billion) for Engie’s 69 percent stake in Glow, before launching a tender offer for the remaining shares. GPSC first proposed the deal earlier this week.

If the same terms were offered to Glow’s other shareholders, the remaining stake would be worth another 43.6 billion baht ($1.33 billion). With its own market value around just $3.3 billion, GPSC also unveiled major fund-raising plans including short-term loans as well as new share and bond issues, sending its stock sharply lower in early Bangkok trading.

The deal will allow state-backed PTT to nearly triple the size of its power generating arm, expanding capacity to 4,835 megawatts (MW) from GPSC’s 1,940 MW. “This acquisition will enlarge our industrial customer base,” GPSC Chief Executive Toemchai Bunnag said in the statement announcing the deal.

GPSC said it would finance the purchase through short-terms loans of 142.5 billion baht to pay for both the Engie stake and subsequent tender offer. It’s also considering issuing up to 74 billion baht of new shares as well as new bonds of up to 68.5 billion baht, pending shareholder approval.

Shares in GPSC fell as much as 6 percent in morning trading in Bangkok as investors digested the implications of the fund-raising plan. Shares in Glow were up 1.6 percent, while PTT was 1.5 percent higher.

Engie said in a statement that the sale was in line with its aim of reducing coal-fired power assets as part of a strategy of reducing carbon emissions. Proceeds will be reinvested in projects with low carbon emissions.

Analysts said the deal made strategic sense for PTT.

Glow has high-quality assets strategically located in Thailand’s industrial east, CGS-CIMB Securities (Thailand) analyst, Suwat Sinsadok said.

Other PTT subsidiaries are already Glow customers, and as industrial zones grow in line with government policy, so will demand for electricity with power plants difficult to build from scratch in those areas, Suwat said.

$1 = 32.7100 baht Reporting by Chayut Setboonsarng Editing by Kenneth Maxwell

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